to choose to go to those who are still hiding behind the veil of not being wrong, and i would hope that both the bus will focus on the investigation of those who say nothing is wrong or agencies. again, the ranking member, at any time that you see a wrong that is not being righted that we can help make right, i look forward to working on them. i recognize mr. i recognize mr. speaker. >> thank you, professor warren, or you have been doing an excellent job.

some seem bent on sabotaging dot frank. most americans believe that our economy got a taxpayer bailout. it builds nothing about you for america. there has been too little reckoning by these wrongdoers. the lack of accountability is stunning. i want to add some comments and reiterate what they're talking about in terms of foreclosure numbers. this is one thing the committee can continue to do, because it is an ongoing matter. readiness can be affected by those back home. security clearances are suspended. there are some actions by banks.

there is an article called fighting on the home front. the report describes in detail the systemic nature of these problems. some of these abuses are already illegal. there are foreclosures without court orders. this report -- report finds that when an initial reports began surfacing, there was an initial downplay of this problem. it became clear that the problem was more widespread. this year, three bands were supposed to pay multimillion- dollar settlements. jpmorgan first paid $2 million but then faced -- paid $56 million. justice department officials also condemned the actions of bank of america. here is what they said.

the bank fails to protect the rights of our service members. some players have been working hard at this issue. since these illegal actions are so much more widespread than originally thought, i believe a comprehensive investigation is needed. with that i yield to mr. quickly for the balance of my time. >> we have a catastrophe caused in large part by unregulated agreed. the greatest economic downturn

since the depression caused by the lack of regulation versus concern about what an agency should do or something that does not go in effect until something later this month. we recognize the real concern not fair, which is what we have gone to her, but we still experience, and how to face them, rather than extraordinary concerns about an agency that has not really done anything yet to challenge those. this agency needs vigilant oversight. we should not obstruct the agency to the intent of the dog the franc. many members are still sought -- dodd frank. -- we all have the beauty of hindsight about what took place. let us remember what a professor

said in 2007. nearly every product sold in america has passed a basic safety regulations. credit proper -- credit products by comparison are not. there are laws that have failed to adapt to the changing market. this was designed to address these regulatory shortcomings. just like consumers are protected against exploding toasters. this will protect consumers against falls -- faulty mortgages. we should focus on this today, instead of what we might do. this will be held to the first -- to the same standard as banks and credit unions for the first time. i think professor born for her efforts.

>> members will have seven days to submit opening statements and sustaining material for the record. >> since listening to your statement a few moments ago, and we are hearing about the abuses , the committee authorizes subpoenas from document 5 mortgage companies. mr. chairman, he said there are some that have admitted wrongdoing. we are talking about those that have not admitted wrongdoing. it is the corporate -- we want to make certain things a priority. we need to continue to look into it. >> i thank the gentleman. at a hearing, only motions for

those related to that hearing can be considered in order. however, we will take the motion and work with a ranking member on an existing legislation. >> they tell us under rule 11, this motion is in order and must be recognized. >> under committee and house rules, the noted business of the committee is different and the hearing. we have not noticed the business of the committee. members would be a device that if witnesses had not shown up, they could be in order to compel that witness. i will work with the ranking member to notice this meeting. if the next business meeting shows a mark of the post office, it would be in order for that. >> i thank the gentleman.

>> [inaudible] >> is the gentleman insists on his motion and we will take a five minute recess. [unintelligible]

>> the hearing will come back to order. i have consulted with the house parliamentarian. he informs me that under hearing procedures, which is three out of the 800 pages of the house row 11, which you have referenced, if you look at hearing procedures, what it says, it goes through paragraph 5 of what is in order. paragraph six says except as provided in paragraph 5, the committee should dispose of request to subpoena individual -- additional witnesses. do you have an additional witness? >> if you look at the subpoena, there is a list of documents produced by five banks.

>> what does it have to do with the hearing? the ranking members' motion is relevant and jermaine in the following way. >> let's get to the first question. your subpoena is for documents. it is for documents not witnesses. >> the subpoena is to the custodian of the records or the documents. >> i want to understand your subpoena. you want and banking executives to be here. >> i want the custodian of the records. >> what part of the english language don't you understand.

we want the custodian of the records to bring the document here. this is the appropriate person to produce them as a witness under oath. that is what the subpoenas are for. >> i appreciate that. >> mr. chairman? >> ago ahead. we are talking about the custodian of the records. we are talking about five banks. the five where the minority and information and these banks did not provide us with one syllable of information. the relevance is we have before us professor elizabeth warren

and her bureau that she has been putting together and working so hard on. part of the task is to look at mortgage issues. you said earlier that with regard to financial services, they do some of the same thing. they have been tasked -- we are looking at them from a historical stand point. that is what it is all about. >> i appreciate the gentleman. i was informed that a ruling of the chair, in order and is not immediately votable under the rules. we will continue this hearing, and it is my intention before the end of the hearing to hold a vote under appeal of the ruling of the chair.

>> parliamentary inquiry. >> thanks very much. at what time, based upon your understanding of the parliamentary rules will we have an opportunity to debate a promotion? -- our motion? basically, we will not have an opportunity -- millan >> this is debatable. we must discuss the and jermaine s of the motion made. i am happy to do it now. >> i had set it aside for later. the office of the house is available to all members, and will have plenty of time to check on what they just told me. one quick question.

>> if the vote is postponed, you shall take reasonable steps to make a notification of when the vote will be held. -- >> it will not happen before 10:40. >> professor warren, i thank you being here. all witnesses will be sworn before testifying. >> can we follow parliamentary procedure, please? >> do you solemnly swear that the testimony will be the truth, the whole truth, and nothing but the truth? thank you. the witness answered in the affirmative. we have a number of enquiries.

i will allow you to go through your false statements before we deal with this which is unrelated to today. your opening statement is in the record. if you are summarizing or have additional items, we want to hear them. today is about a hearing what you have to say. >> thank you, chairman. thank you for inviting me to testify. we appreciate the committee's important oversight role. we are responding to your interest in how the bureau is operating. we are working nonstop to build

an effective organization with the goal of making consumer financial markets better working for consumers and financial services providers. we want to make risks clear and we want consumers to be able to compare credit cards or mortgages. we are opposed to complicated forms and fine print. we believe they do not help consumers and to not work for responsible lenders that are happy to have their products head-to-head in a competitive market. at the end of the day, we think every in consumer should have basic information they need and answer two basic questions. can i afford this and is it the best deal i can get? that is where this new agency is formed. we have seen the consequences of the regulatory system.

no single regulator has the authority and comprehensive tools necessary to ensure that consumer financial markets work for american families. for years, we have seen the growth and fine print and the complex terms. fine print that makes it almost impossible for consumers to know what they are really getting into before they sign on the dotted line. we have witnessed an explosion virus credit consumer lending upon a largely unregulated companies such as some title lenders. we have seen the economy driven to the brink of collapse with higher risk mortgages to people that cannot possibly be paid them. as a country, we are paying a high price for a broken consumer credit system. the agency will increase accountability in government.

several federal agencies had bits and pieces of consumer financial protection. no one had the authority or the comprehensive tools necessary to monitor whether prices and risks were clear and to ensure that the consumer markets work for american families. in the wake of the worst financial disaster since the great depression, the franc act was developed placing consumer protection responsibility squarely on the seal pd. -- have in my witten testimony, i'd describe our achievements to date. we have made significant progress in our efforts to combine two complicated mortgage disclosure documents into a single short form.

we are laying the groundwork which will give better protection for all families. it will help level the playing field between banks and other kinds of lenders. we have been under the strong leadership of holly petraeus. we have hired several employees from diverse backgrounds. we have people coming to us from financial-services, consumer advocacy, consumer banking. and we have kept stakeholders' informed every step along the way. i have spoken with community bankers and i have spoken with the dozens of credit unions and

credit union officials. i have spoken too big banking sectors, the trade association, a government watchdog groups and consumer advocates across the country. i am pleased to report that out or initiatives on improving market reforms, supervising credit businesses and setting up a strong military service offices have received widespread support from those individuals across this country. in my written testimony, i describe in detail the steps to provide meaningful oversight and to make sure it remains accountable to congress and the american people. i appreciate the opportunity to discuss that oversight today. members of the committee, elijah cummings, thank you for alumnae

to testify. we are preparing this agency to begin its various responsibilities in appreciate these important oversight roles of the committee and your efforts. >> i thank the gentle lady for her comments. i will now recognize myself or five minutes. i received from kim wallace in legislative affairs department, it rather interesting response to our document request -- one second. we will leave you with a copy of it. i think he works capri for you

for the treasury. >> he does not work for me. he is part of the treasury. >> we requested documents from you. we will work through document requests. we received 300 pages, most of it public. some of the documents we requested, the department of justice has concerns that may implicate the department equities for the closing some of these records which would impact law-enforcement efforts. you are not in law enforcement. you would not be involved in things that a criminal

investigation by your agency, would you? >> i am afraid there may be some confusion. i want to make sure we do not get it down the wrong path. i believe the request for the department of treasury. >> we put it to the agency that is the custodian of your records. we will have you take this. come july, -- a week from today, you will inherit these things. during this timeframe, some of your requests have come in. they have been pretty an adequate. the judicial watch is appealing

they have searched production records stating there has been abuse. the problem is they've received these documents. that is their letter. they received a document that looks like this. when someone reid? something, you do not even know what page it is from. that is considered excess. you have to find a way to make sure that when you deliver a paper with nothing on it, you have to know what it is responsive to. but the which they received was

not as many pages as they should have, but in the case of judicial watch, they had been given the information that just as on your behalf, would not give them. they have the one that is responsive and they can see why they have a right to it. a week from today, he will inherit by a number of transparency groups that are saying we have the documents on a redacted. you violated the law. that will be one of the first things on your table. can you address them immediately. and report on how you resolve the inconsistencies between state agencies and would justice

on your behalf did not give it? >> i have never seen as. i do want to say, i am not sure i can explain or be in a position to speak to the justice. >> you will inherit those requests. you can resolve those appeals by having your own people kobach and a look at the request and fully comply, or you will inherit the appeal. i am sure the justice will not continue defending on your behalf. will you look at them immediately? i think the requests will speak loudly to whether or not the transparency that you speak of and we speak of is actually occurring. sometimes the best role of

transparency is do you give all you can give or hide the possible side action? some officials have a considerable amount of what the law actually requires them to put out. treasury violated the law and what is complete and transparent, and you kit -- could give out by saying, we will give all we can. we are not dealing with current criminal activities as a general. >> i am a little lost in the conversation. >> it is for documents related to your activities leading up to the formation. >> i am not sure which documents you are talking about. is it a matter where the justice the permit has indicated some

matter of interest. we have many activities. we have had a lot of requests we have hired people to understand it. the justice department does not have much of interest in it one way or the other. >> i want to be respectful of the time. >> your name is not geithner is it? >> and no, it is not. >> the statement he is talking about is addressed to timothy geithner ou. i do not want the press to get confused and there is an implication that you are trying to hold back document. you did not try to do that they do?

>> no, sir. >> very well. we heard from a better and that was immediately foreclosed on and a worker there was tricked by a phony debt consolidation company, these are real people that work hard and played by the rules, and expect others to do the same. every single member of this committee is saying, -- what struck me most is the overwhelming excitement. they had to turn people away. several local papers said you were treated like a rock star. i do not know about that. how do you see our constituents moving around? tell us about that briefly. >> i appreciate the brief

opportunity. one exciting part about seven of the financial bureau has been being able to spend time talking to americans around the country. these are americans of all political persuasion, ages, races, who say this is a real chance to see government work for me. it is a chance to have somebody on my side. it is a chance to have a voice in world where it is run by big companies and fine print, and the tricks into traps, and a surprise as. i think we have a real chance with this agency. it is a chance not only to help markets perform better but restore hope for many americans. >> i heard that they are glad there is someone looking out for

them. they're looking at a record profits. so many of them are drowning. let me ask you about a mortgage issue. the federal reserve issued a report finding widespread problems at 14 mortgage servicing companies. let me read the major finding. it resulted in unsafe and unsound practices, and violations of federal and state law requirements. there was concern that widespread risk may be presented to consumers, communities, market participants, and the overall market. it represents more than two- thirds of the servicing market.

they consider problems cited within this report that there may be widespread consequences. professor warren, these are massive and systemic witnesses. what role will this play in addressing this? >> the best way to understand it is that we will be on the frontlines. the question is what kind of mortgages get fed into this system on the front end? is it possible to use mortgages to surprise and detrick people? so that consumers are not able to ask the questions, can i afford this? our job is to be there on the front end. we are taking enormous steps in that direction to make sure that mortgage is clear, people can't tell what they can afford and

shop in the marketplace. it is our job to be there throughout the process, including in the end on mortgage servicing. we want to make sure that large financial institutions that had no transactions are complying with the law. >> with respect to service members, cases where foreclosures were not heeded, this review was based on only a sampling of a relatively small number. there is a comprehensive review of all files to identify borrowers that had been financially harmed. when will we know the full extent of this problem? this year or next year?

>> i do not know. i relay -- rely on sheila bear and her most recent testimony. even with this, we do not yet know the full extent. >> it is pretty bad. thanks very much. >> an investor's business daily reported on july 8 that the justice department has an ongoing investigation about lending and minority communities. you have been an advisor to the justice before under your testimony. it is regarding the mortgage issue. are you serving as an adviser for this investigation? >> the secretary of the treasury --

>> i was wondering about this biased bank investigation reported in the new york times. [unintelligible] in my opinion, i think the financial terms need to be accurately and correctly disclosed so individuals can make their decisions based on whether or not they would like to purchase the product. you mentioned in your testimony -- i think it is positive. individual terms that they need and similar legislation. disclosure is an important piece in all of that. do you agree? >> yes. >> in terms of what do you see,

do you think your actions mainly pertain to enhancing disclosures? will that be the core work? >> i think the best way to understand it is there are multiple tools available in order to promote a function in marketing. people need to have adequate and meaningful disclosure. a significant part of what we will do will be supervision and enforcement. more than half of our resources will go to supervision and reinforcements of a financial institutions to make sure everyone is following the rules. banks and nonbanks. we also have a significant

responsibility on consumer and financial education. >> in terms of financial products, the you see financial products as so complex that disclosure would not be a remedy? >> it is a good and interesting question. i recall sitting in the house financial services during long and testimony into the question came up about banning products. the then president said, there are certain products that should be banned. i am not certain if that is true. i would like to start with the concepts of let's get out there and try some real disclosure.

put real power into the hands of the consumers. i believe in market. let's try to get them working. >> is there a product out there today that it needs to be eliminated? >> i do not know of one. if you have a particular suggestion, you would like me to take a look at? >> i do not have a half billion budget. that is why i thought he would have some ideas on it. do you think enforcement mechanisms would drive the terms going forward? stunning interest rates, the structures? >> i think what enforcement mechanisms are about is making sure the laws are properly

enforced. supervision and -- if it cannot work out otherwise, so when banks if they do not follow the laws. the remedy part of be a are changing their practice going forward in a way you described? in a mortgage is disclosure issue we are talking about, that is an important piece of this going forward. >> that would be new regulation that would replace the older, complicated, more complex regulation and requires higher regulated costs for financial institutions and produce a lot less dalia for consumers. what we have done is we have something that is cheaper for mortgage originators of four

banks and credit unions to issue. it is a forum. they should follow that, just like under current law. we think it will be a more effective a form. >> you will be recognized for five minutes. >> the minority presented the list. >> thanks for considering me. >> thanks. welcome, professor warren. i would like to ask you that after we went through the great recession and almost half of the great depression, and wealth was lost, would you say that's there is a consensus that forms are made to prevent another crisis?

the credit-card bill of rights is important for consumers. would they carefully construct and urgently needed and be free to protect consumers and go into effect july 21? >> yes, i do. >> what has concerned me deeply in is the number of questions, because people have asked you for advice. i thought for the freedom of speech, it is in our constitution and fundamental rights. you have described as a leading consumer specialist in advisor. it is unusual -- you are an advisor to the president and secretary geithner.

other leaders and managers in industry, it is -- is it unusual for them to call you and asking for advice? >> i have been giving advice for a very long time. i hope it has been valuable. i have always been willing to talk to people. >> you do not have a vote. you are basically putting in place an agency that the president has asked you to put in place. you do not have any power to force anyone to do anything. you can answer the phone. you can give it vice. i would say that is a basic american fundamental principle,

and one that should be protected for every person. especially professors and academics that are leading specialists in the area. talk about oversight, transparency. the last thing we want to do is say people cannot give advice. is that a fair statement? >> it is good to get advice. i believe in it buys and in both directions we have been beneficiaries of a great deal of the device from many people, outside government and inside. >> i would like a unanimous consensus put in place. an article that was in the american banker -- it talks

about banks likely to pay a price for leadership. it talks about what they can do it on july 21. and what they cannot do if they do not have a confirmed the leader. they can write and enforce the rules that are ready in place, but what is interesting to me is what they cannot do, which i believe is very beneficial, to place them on a level playing field. they cannot define which banks can be supervised by the agency. they cannot examine or enforce laws against a non-bank. an unregulated non-bank activity with the sub-prime mortgages, credit default swaps, highly leveraged derivatives, that led

us to this crisis. not allowing the leader to come in and do this, according to the american banker, would be harmful to the financial institutions of our country, particularly the regulated banks. >> i would just say that when a consumer agency has its director and power is ready to go into full operational, we can do great things. i would like to comment on the ranking member. my time has expired. >> 160 service members were foreclosed on unfair the according to the department of justice. i feel this opinion is in order and we should look at this information on the abuse.

>> the house appropriations committee is quoted as saying they are disappointed and was not more forthcoming on how to spend the taxpayers' money. the consumer financial protection board should look at this and how to do it and how much it should cost. how do the taxpayers see but you are going to do and how you're going to do it? >> we started five months before the day we were supposed to go live building wealth sites -- website. >> i want to get very specific about the budget put forth in this document. there are 10 line items. a full-time partner -- permit position, and other positions

that account for about to a $25 million. where is the detail about what you are going to do and how you are going to do it? how did you find the breakdown of that number? we are looking for the documents, the transparency, and how you are going to do that? >> tell me if this is helpful. the first level is to describe where we will be spending money in the consumer financial protection agency. >> i am worried about the fine tale details. we do not have the details on how you will put this forward.

>> every contract issued by the consumer financial protection bureau is done through the ordinary competitive process. >> in advance of the contract. unlike other agencies, the consumer protection finance does not have a relationship between policy objective and budgetary resources. -- the relationship to the current year in the budget year. how do we get the details of all of this information? you have a top line #that seems to be hiding the details of how you got this. >> no one is hiding anything.

>> you have -- i am worried about some people. how did they find up to make of these numbers? the appropriations committee cannot see the numbers, so i doubt that the american population can. >> it was the type of contracts, the amount of the contracts. >> what about these other items? not just the contracts. budgetary resources -- where do we find all of this information? >> we are in the process of developing our performance metrics. as soon as we are step up, -- >> by next week, you are going

to have this? this will be available next week? >> i am not sure how many things you read. i am not familiar with the document you are reading from. i am not sure what particular paragraph. >> the budget justification, which is dramatically different from any other agency moving forward. >> this is our document? i think you were reading from something else. >> the appropriations committee said that unlike other agencies, and it listed out what we normally seen, and all of that is absent. >> >> can we get a copy of this

document? >> is there a request outstanding from the appropriations committee? >> that is what i am understanding. this committee is asking for the same sort of transparency. >> we will be glad to come back in the brief you to find something that is adequately transparent to congress and the american people. >> i would hope that information would be on the website. >> this is a stunning. being concerned about a consumer group, and many standing up.

this is not too transparent. i only have a five minutes. i will not get to go over as you did. no concern about responding to subpoenas to the bank asking them to show documents about them acting in afghanistan or iraq. we are going around and around. >> i think the records are well- chronicled. they lose document, they are unresponsive. they have a false negative credit reporting. all of it is going on, and it is terrible for the people. it is more terrible when they do it to our service people overseas.

can you put this up? he was deployed to iraq as a the tenant in 2009-2010. his bank told his wife that she could pay using money orders. chase failed to process the payments. and they submitted inaccurate reports to the credit bureaus, which badly impacted his security clearance while he was still deployed. the military tried to help him. she described her uphill battle. she said, to be honest, i have not been able to do anything with this client. customer service refuses to talk to me without a letter of authorization. i have sent it four separate times to different facts numbers. i have left a voice messages

with tebet supervisors and no one calls me back. i need to talk to a human being that will listen to the facts of the case and understand the need to make it right. if this jag officer cannot get corp., how can we respect -- expect other members will get a different response? >> these systems are not designed to be responsive. >> there are clear abuses of practices. when they finally admitted they were wrong, -- how often are mortgage services initiating these and then want to charge more fees on the back end? >> we do not know.

there has not been a full investigation into this. >> this is far from unique. everybody has had these kinds of complaints coming in from constituents. that is why it is critical that we get the documents from the ranking member. we must thoroughly investigate all of the illegalities of these excuses. no should use -- no one should spend their time in afghanistan trying to unwind the mistakes of customer service. thanks. i yelled back. -- yield back.

>> there were a number of settlements with country ride for service members. families were out on the streets while they were serving in iraq. i asked permission to put these documents in the record. we can talk about process, appropriations, but we are the investigative committee. we should follow with a subpoena and voluntary action to look at the bottom of this. they are heading up a special division for the military. >> thanks.

we appreciate the opportunity to question you on a subcommittee hearing. the concerns of the salaries is that they were 40% higher than federal salaries. it is not consistent with the federal salaries. there is concern that in this economy, it may be at a little more liberty than we would like. i want to talk a couple of issues. we have heard about the service men and women. that issue was already declared illegal. i am trying to understand -- we all agree that this is a bipartisan issue that our men

and women should be protected. this action by chavis was already deemed illegal. how do we justify this $500 million department, if that is the gist of what we are talking about here? >> we know about specific abuses that has come to light. it is brought by a government investigation. we know of some that have publicly committed to wrongdoing. >> that was not your department. you are not up and running yet. >> that is right.

i thought you asked how the consumer agency is helpful. we are there to be an ongoing monitor. wheat set up our offices back in january. it was one of the first groups we organized. special reports came out about a legal foreclosure. holly petraeus wrote a letter immediately asking them to review their practices. we have heard back from about half of them. >> i notion of veteran affairs, we have handled this issue up close. i want to talk to you about a couple of issues. the job numbers came out. they were horrific. my concern is what you are going

to do will continue to lurk in job growth in this country. do you intend to raise compliant costs or raise the cost of credit for consumers? >> we are trying to make prices clear and trying to make it easy for families to get product. i do not think it should cost jobs.

live coverage from salt lake city here on c- span. [applause] >> welcome to the closing plenary of the 2011 national governors association annual meeting. we are going to be educated about the globe, what is going on, and what it means for the united states by our amazing ,"iter from "new york times

tom friedman. there is no question we have challenges across the world. our teenagers rank 25th in math, 17th in science, 14th in reading. this is not confined to our k through 12 education. of the last two decades, united states has fallen from first to 12th in the number of americans that complete post-secondary degrees. the u.s. is faced with a generation of young adults projected to have a lower educational attainment than their parents. it comes as no surprise that only 44% of americans believe it is likely that today's youth will have a better life than their parents, the lowest rate since the poll began in 1983. we have opened the doors to higher education for millions of americans.

i think our of higher education system is second to none. unfortunately, too few of our students who began higher education and ultimately obtain a certificate or agrdegree. without more students completing high quality certificates and degrees, our ability to out-innovate and out- produce other nations is in jeopardy. we all know education is the primary driver of economic growth. it is our supply of skilled labor that remains flat. the economic engine that drove us to prominence in the 20th century may again stalled. we must redouble our efforts to invest in the human capital, the infrastructure of america, that has defined our standing in the world for the past 70 years. it is my pleasure sedate to welcome back tom friedman, one

of our nation's foremost thinkers, to talk about global competition and the challenges and opportunities that lie ahead for our united states. he has written for "new york times" for 30 years. he has published five best- selling books. he has received numerous awards for his reporting and commentary from including the national press club lifetime achievement award. he has joined us on several occasions in the past to offer his inside and opinion on the hot topics of the day. it is with great pleasure that here in the great state of utah we get to turn again for the inside of our friend tom friedman, for his perspective on how america can recapture its position as a global competitor of innovation and economic leadership in the world. tom, thank you.

[applause] >> governor, thank you. it is a treat to be back here for the governors' conference and be back in utah. this is a great audience. one thing i love about this meeting is i look around and see all of these great governors. some of them i have had the pleasure of knowing. it is not a democrat or republican under anyone's name. it is in that spirit i come here. i hope i give both sides a little indigestion and support in what i am about to say. i will talk for about 30 or 40 minutes and then opened up for dialogue -- open it up for dialogue. i am going to give you a sneak preview of my new book. it is a book i have written with a different and longtime collaborator from johns hopkins university. the book is not until september,

but it is certainly on the topic of the day. the book is called "that used to be us: how america fell behind in the world we invented in how we find our way back." every time michael and i tell people about our book, they ask if it has a happy ending. [laughter] we tell them it does have a happy ending. what we cannot tell you is whether it is fiction or nonfiction. that is going to depend on us. you might wonder why two foreign-policy guys. he teaches and i am a columnist. you may ask why we ended up writing a book about foreign policy. over the last couple of years,

we started to notice something we would start talking about america in the world and would end up talking about just america. we realized what that was telling us was that america, its fate, future, and vitality, really is the biggest foreign policy issues in the world. we could not think intelligently about american foreign policy unless we were thinking creatively and anew about the sources of our strength and vitality. i will be honest with you. it is our view that the american peril. inp that is so important. we have taken the american dream

so much for granted that we have forgotten it is the vital source of our domestic stability. it has enabled us to hold this country together, invite in so many immigrants, to unify 50 states. it is the idea of a growing economy where everyone can expect to the better than their parents. the american dream is vital to our status in the world. people forget that we provide the world so much global governance, whether it is maintaining global institutions or protecting the sea lanes of global commerce. i do not mind saying this at all. america is the tent pole that holds of the world. if that fractures, your kids will not just grow up in a different america. they will grow up in a very different world. this thing that we call america

is a precious jewel. we really need to get back to polishing it. with that introduction, i would like to share with you the first few paragraphs of the book. the first chapter is called "if you see something, say something." that is the homeland security model. we are now applying it to the country as a whole. this is a book about america that begins in china. in september of 2010, i attended the world economic conference in china. it involved a 3.5 our car ride from beijing to a chinese version of detroit. now to get there, you have to go to the beijing south road crustacean. it was a modern building covered

with solar panels. you buy a ticket from an electronic kiosks offering choices in chinese and english. the board of a high-speed train that goes to another rumi modern train station that is said to be the fastest when it began operating in 2008. the chinese poetry and covers -- the chinese bullet train covers distances fast. the expedition center was a mass of beautifully appointed structure. as if the convention center was not impressive enough, eco dash sponsors give some facts and figures. the co-sponsors gave some facts and figures. the construction of the convention center started in 2009 and was completed in may of 2010.

i started counting on my fingers -- eight months. returning home to maryland, i was describing the complex and how quickly it was built. ann interrupted me and asked if i had been to the subway stop quickly. we lived in bethesda and often use the washington metro subway to get to work in downtown washington. i had been there and new-issue is talking about. the two short escalator's had been under repair for nearly six months. the one being fixed was closed. the other had to be converted into a two-way staircase. this was creating a mess at rush hour. everyone had to squeeze single file one locked escalator. it sometimes took 10 minutes just to get out of the station. the sign on the close

escalator's said the repairs were part of the massive modernization project. what was taking this modernization so long? we investigated. a spokesman for the railroad said the repairs were scheduled to take six months and were on schedule. she said mechanics need 10 to 12 weeks to fix each one. the simple comparison may start in point. it to china 32 weeks to build a world-class convention center from the ground up including giant escalators in every corner. it was taking the washington metro cruz 24 weeks to repair two tiny escalators with 21 steps each. researched further and found in local news radio station that interviewed the manager. he said they were behind the curve and had to catch up. last week, smoke began pouring out of the escalators at the dupont station during rush-hour.

"the washington post" ran a letter to the editor. he said as someone who has ridden metro for 30 years, i can think of a better way to assess the health of the escalators. for decades, they ran efficiently. for the past few years, aging parts have generated terrible noise is the sound like a dinosaur trapped in a tar pit screeching is dying screams. what we found most disturbing came from maryland community news about the long lines at rush hour. my impression standing on line is that people have sort of gotten used to it. benjamin ross of bethesda wrote that people have sort of gotten used to it. it is the sense of resignation and that this is just how things are in america today, the sense that america's best days are behind in china's best days are ahead of it, have become the subject of dinner party and

caution conversations across america today. do we buy the idea that america owned the 19th and 20th century and china will inevitably on the 21st century. iraq no, we do not buy that. we have written this book -- no, we do not buy that. we have written this book to explain that view. we're not pessimists when it comes to america's future. we are optimists. we're frustrated optimists. that is my mode it today. i am an optimist, but i am frustrated optimist. the title of the first chapter is the mantra of the department: security -- department of homeland security posted in airports and roads stations around the country. we have seen and heard something. millions of americans have as well. will we have seen is not a

suspicious package under a stairwell. what we have seen is hiding in plain sight. we have seen something that poses a greater threat to our national security and well-being than al qaeda ever will. we have seen a country with enormous potential falling into the worst sort of decline, a slow decline, just slow enough for us not to drop everything and pulled together for collective action to fix what needs to be fixed. this book is our way of saying something about what is wrong, why things of gone wrong, and what we can and must do to make them right. our view is that america faces four great challenges. one is adapting to the i.t. revolution. second is adapting to globalization. the third is all the issues around entitlements and deficits. the fourth is energy and climate. i do not have time to go into all of them. i will focus on the first two.

adapting to the globalization revolution and the i.t. revolution. it is really one subject because they merge and create what i call a flat world. what i am really talking about is adapting to the flattening of the world. last time i was here was to talk about how the world is flat. i wrote that book in 2004. i thought it was at the cutting edge. if you pick up the first edition of "the world is flat" and look in the index, you will discover that facebook is not in it. facebook basically did not exist. 4g was a parking place.

applications for something you sent to colleges. let me repeat that if you did not get it. [laughter] when i declared that the world was flat, facebook basically did not exist. twitter was a sound. a cloud was in the sky. for most people, skype was a typo. all of that has happened in just the last six years. the only way i can describe what that has done is that it has taken us into flat world 2.0. the world is not just connected them. it is hyper-connected. i would argue that is the biggest thing going on in the world today. you can see this through a lot of different news stories.

when i wrote that, i said that we connected boston and bank a lawyer --bangalore. since 2004, we have connecting boston, bangalore, and another city. india is adding 18 million cellphones a month. they are now part of this flat world. i have spent a lot of time following the middle east. we have connected detroit and damascus. now we have connected detroit, damascus, and dara. it is a dusty desert town on the syrian-jordanian border where the revolution began. syria has banned every

international news organization. bbc, cnn, fox, "new york times," and al jazeera. yet every night, you have been seeing news footage coming out of dra. if you look at the bottom of your screen, it says is from smn. sham news network. sham is arabic for syria. i would bet the governors in their wallets right now have enough money in their wallets to start sham news network. they have been pumping out video and flip camera footage from dara through sham news network. that is half what the world has become. on october 30, 2010, an indian newspaper ran a small item. i happened to be there at a time. it caught my eye. it said a communications firm

had just started had3g service at the summit of mount everest. it will allow thousands of climbers to access highspeed video and internet calls using their mobile phones. the bbc observed it was a far cry from 1953 when edmund hillary first climbed the summit using runners to carry messages from his expedition to the nearest telegraph office. you can imagine the phone calls being made. "hi, mom. you will never guess where i am calling from." the same month, an item showed up in the business pages. it reported that a small silicon valley company had just opened the world's largest commercial solar research and development center, a privately funded, in

china. it sought applications for 260 scientists and technologists in china. the company spokesman said the center received a 26,000 chinese applications and hired three and 30 people. 31% headmaster's or ph.d. degrees. roughly 50% of the solar panels were made in china last year. we need to be where the customers are. one last news story. my mother-in-law was formerly chairman of the board of cornell college. here is an item the paper carried about granell college in the middle of iowa. this year, inearly one out of 10 students applied were from china. it is a small college of 1600 students. half of the applicants from china had perfect scores of 800

on their sats. what is all of this telling us? it is telling us that the world is flatter than ever. when the world gets this flat, it means the whole global curve is being raised. employers in all states now have that much easier access to software, robotics, and talent anywhere in the world. i know you have heard this joke before. that is what they said about japan in the 1980's. we have heard this joke before. they said japan was going to steamroll us. lo and behold, we steamrolled them. this is a little bit different route. japan threatened two american industries in one american town. the town was detroit. the industries were consumer

electronics and of those a -- autos. globalization challenges every town, american jobs, and --dustry directly or industr indirectly. this is a different show. you have not heard this one before. what is basically happening is the whole global curve is being raised. i came across this post. i thought it really captured when it meant for the job market and education. this is on his blog. he attached it to a column of mine in the comments. that is where i saw it. he has headed a variety of technology companies and start- ups. he also teaches in the courses. mba courses. he also teaches

he explained it this way. i am in the course of killing jobs. i would kill jobs three ways. i kill jobs when i so, with competitors, and focusing on internal productivity. all the companies i have been ceo of eliminate jobs by automation, the marketing is clear -- the best workers, more consistent output. i reckon i have eliminated over 100,000 jobs in the world by this services my company sells. so there, i said it, i am a serial job killer. any job that can be eliminated through cheaper labor is not coming back. the worker can come back. they often come back by being underemployed. often return to -- often, others return to previous levels of compensation.

but the landscape has changed as far as what is a sustainable job. so what is a sustainable job in such hyper connected, hyper flat world? he says the best way i can articulate what is a sustainable job is to tell you that as a job killer the sustainable job is a job i cannot kill. a sustainable job is a job i cannot kill and i cannot kill creative people. there is no productivity solution or outsourcing that i can sell to eliminate a creative person. i cannot kill unique value creator. a unique value creator is unique. they may be someone with their relationship to a client or a great salesman or they might be someone who has spent so much time mastering a market or subject at no one else can match. what he is telling you, i think

is critical to the employment picture today. i call it a great inflexion. this hyper flattening of the world coincided with our great depression. what that's doing is driving these productivity tools faster than ever. there is no question we need more demands, but don't lose sight of this transition. this is hugely important. what we did, and the thing you have to understand about this trend is that it applies to everybody. it applies to everyone. you're saying easy for you to say, mr. new york times columnist. you will not be all sorts. let me tell you about my life. i inherited james reston's office in the washington bureau of the new york times. those of you or old enough to know him as one of our great

columnist as the '60s and '70s, what an honor, i inherited his office and i will bet if he were here, we could ask him. backld bet he's to wake up in the '60s and ask himself on any given morning, i wonder what my seven competitors are going to write today. i wonder what they're going to write? i'd do the same thing. i wake up every morning and say i wonder what my 70 billion competitors are going to write today. i wrote about greece this morning. our stringer in greece e-mail may what people in greece are saying about it. if i cannot tell them something new or fresh about their country, then he needs me? so and none of us is going to be immune to this process. what is basically going on to

put it in language of labor economist is called skills bias polarization. that means those people who do non-routine worked, computer scientists, physicists, governor, those of us to do non- routine work, this flat world works for us better than ever. those who do routine work in the middle are getting crushed by anything that can be automated, outsourced, or digitized. those who do the low-skilled work like a butcher, baker, the candlestick maker, they will be o.k. but they will be dependent on local circumstances. we are basically blowing a hole faster and bigger than ever in the labour market. if you do not have those non- routine skills, you will be

under more pressure than ever. but i want to stress that it applies to everybody. i started thinking about this at the height of the recession. i was having dinner of their best friends in washington. i said what's the subprime crisis, what does it mean for a law firm? he says it means we're laying off people. i said that's interesting. who gets laid off first at a law firm? is it last in, first out? he said not anymore. basically, who gets laid off is when we are in the middle of a credible and there's a lot of work, the people that get paid, they hand it to the lawyers and they hand it back, some of them oregon. the people we're keeping our the ones who said we could do the old work in a new way or we can do no work and a new way if we take advantage of this new

world. what's that about? we have a chapter in the book called "help wanted because you can't actually talk about education and much talk to employers and say what are you guys looking for in an employee today? we took four categories, high- end white collar, low-end white- collar, blue-collar and green collar. the u.s. army. the u.s. army is the biggest employer and one of the biggest educators in the country. and you know what they said? they all gave the same answer -- we are looking for people who have critical reasoning and technical skills in order to give an interview. in order to get an interview. because now we want something else. we don't just want people who can do the math and critical

reasoning. we want people who can adapt, and vent, and reinvent the job along the way. the global market is moving so fast that if i do not have workers touching the product and cannot adapt and reinvent it faster, i have a real problem. dupont said we want every worker today, starting with a line worker to be present. to be paying attention because that worker may have an insight that can drive enormous productivity or new products. my favorite interview in that chapter wa with general martin dempsey. he just became the chairman of the joint chiefs. when we interviewed him, he was head of the army education core and he told a remarkable story. he was our commander who took

baghdad from saddam hussein in 2003. he later went on to be sent, commander. he later went on to be the cent com commander. he was visiting an outpost in the far reaches of afghanistan. he sat down to interview capt. there. at the end of the interview, he realized that capt. in that isolated outpost in afghanistan, because of this hyper connectivity had access to more intelligence and more firepower than martin dempsey did when he took baghdad from saddam hussein. that has driven his whole education of the army system. at the camp, they give every new recouped and iphone and you

download the application and teach the class. when you have a commander in the outpost of afghanistan with more power -- more firepower and access to intelligence than you did when he commanded the troops who took baghdad, that commander has to be trained to invent, reinvent, and adapt so much more than anyone can -- anyone 10, 15, 20 years ago. that's happening throughout the labor market. what does it mean for education? >> it means we have to educational challenges today. we need more education in better education. buy more education, and this is a challenge all of the face, we need to bring the bottom up to our average and we need to do it really fast. at the same time, we need to bring our average so much higher. to the global average.

do not compare your students to the school down the street because they are not competing for that place anymore. not with the school down the street. they are complete -- their competing with the students from shanghai which this year won the top place in the world tests. we need to bring the bottom to the average and we need to bring the average so much higher because average in this hyper connected world is officially over. average is over. woody allen's dictum than 90 percent cited showing up is no longer true. it will not cut it anymore. being average won't cut it anymore. america's economic future will depend on how well we are able

to get our country to be all women are strong, all the women are good-looking and all the children are above average. average is over in a world where so many machines and available foreign workers can get average or better, the curve everyone is being greeted on is moving up. what is average work will not return average wages let alone above-average wages. if all you ever do is all we've ever done, that's no longer applicable. if all you ever do is all you ever done, all you'll ever get is less than you have ever got given this hyper connection of the world. what that means is everyone has got to find their extra. their own unique value proposition. whatever your extra is, everyone needs to find it and use it to become a creed of lawyer,

columnists, creative governor, creative service worker. everyone everyday is going to have to justify their value added. for some, it will be invented and a new product or service. for others it will be reinventing yourself to do a routine task in a new or better way. how many of us have elderly parents in a nursing home. you go to the nursing home and there's that one health-care worker who didn't just take care of mom and dad but engaged in a way that really brightened their day? that person found their extra. the first thing we do in see that as go to the manager and say we want that person to work with mom and an ad and we will pay more for that. everyone has some extra to find. that is really where education

is going to have to go. i hate to say this, but so many americans are being educated not for $40 an hour jobs, but $12 an hour jobs. they may think they're being educated for $40 an hour jobs but they're not. the creative component of education has to be on the rise. we have to become a nation of starter uppers, whether it is starting up yourself, starting in a committee -- a community organization, a new company, started in website, we have got to become a nation of starter uppers' because productivity will be constantly shrinking of the workforce. the days when you could hope that intel would come to your state with a factory of 20,000 people, those days are over. now read 20,000 people starting jobs for five people, 10 people and that is what everybody has

to be thinking about. how do i make people's lives more comfortable, more educated? more fun, more entertaining? we have to be a nation of starter uppers. the last thing i will say about this -- their right attitude for educators today, all of us, and you are all educators is to teach our kids not just reading, writing and arithmetic, but to get them to think like new immigrants, like artisans, and like a waitress. let me explain. what does it mean to think like an immigrant? it means approaching the world with a view that nothing is owed to you. nothing is or will be given that you have to make it on your own. there is no legacies' lot waiting for you at harvard, the family farm or anywhere else. you have to earn or create your

place in the world and you have to pay close attention to the world in which your living. all americans now find themselves in new and unfamiliar circumstances in this hyper connected world. we are all new immigrants in this hyper connected world and that's how you have to approach education and the job market, with that same kind of internal drive and fortitude. seconds, this is from the professor and labor economist at harvard who says everyone should think like an artist and. artists and was the term used before mass manufacturing to describe people who made things are provided services with a distinctive touch and flare in which they took personal pride. whether with a saddle or a pair of shoes or piece of jewelry, the shoemaker, the doctors, the dressmaker, they're all

artisans. artisans give a personal touch to what related. they often carved their own initials into what they did. it was such a personal touch. that's a good mind set for whatever job you are doing. would you want to put your initials on it? think like an artisan. finally, it would not hurt for all of us to think like a waiter or waitress. in late august of 2010, was back in my hometown of minneapolis having breakfast with my best friend at the pancake house. he ordered three buttermilk pancakes and fruit. i ordered three pancakes and scrambled eggs. when the waitress came back with our breakfast, she put the down in front of each of us, but when she put my friends played down, she said i gave you extra fruit. we gave her a 50% tip for that.

that waitress does not control much in her work environment, but she controlled the fruit. it was her little way of doing something extra. in many ways, we all need to think like that waitress and ask what is it about how i'd do my job will differentiate me more than ever? we're all waiters and waitresses trying to do that something extra that a computer or robot or just an average person cannot or will not do. getting everyone to unlock, unleashed, discover, to become creative lawyers, doctors and journalists, that's our educational challenge. i like the way the president of florida international university

with 42,000 students once put it. he said is imperative would become better at educating students not just to take good jobs, but to create good jobs. that's good advice. in today's world, you will not -- we are lucky. we are all roughly from the same generation. we got to find our job when we got out of college. our kids will increasingly have to create their job when they get out of college. the sooner, faster and more effectively we train them to do that, the better. we are really going into a different world. the world i grew up in was a world of developed and developing country. that is over. in the flat world, there will be two kinds of countries. there is high imagination enabling countries and low imagination enabling countries.

that is going to be what really makes a difference. if i've just got the spark of an idea, i can go to tie one and a will do this. jump over to amazon and they will do my fulfillment and delivery and i can get my logo done and find an accountant as well. they are all commodities except this -- having more people in our society doing this in every way in their lives, that is what it's about. we have to be their hyper, high imagination enabling country. that is where the cutting edge of jobs is going to be. let me close with a few concluding points. you will notice what i have tried to do today is talk about america and it challenges by

starting where i think the conversation should start -- what world are we living in? to me, it is so sad to listen to the national debate today which is all about i cut you one trillion, raise your trillion. you can go without a plan, but if you cut without a plan, watch out. you may hit an artery. you may sever a bone. we do have to cut. that's a big part -- we a cut, raise revenue and invest. but let's start a conversation with what world we are in. not who can throw the biggest number on the table and the most stubborn about saving something were cutting something. it is an idiotic debate we're having and unworthy of our

country. this is a whole other theme in the book which we do not have time to talk about. we did not get here by accident. you did not get where you are and i did not get our i.m. on my own. yes there is a lot of people out there is as i got this and i'm going to keep the government out of my life. you got here as a product of the greatest public-private partnership in the history of the world. that's how you got here. and we call this americas at formula for success. it has five parts. we educate our people up to and beyond what ever the level of technology is starting with universal primary and then post secondary education.

we invite the world immigrants in, those with low skills and those with high skills, the first round intellectual draft choices, and start 30% to 40% of the new country -- new companies every year. build the best infrastructure and we have the best rules, the smallest rules -- the smartest rules, and not too many to incentivize risk-taking and capital formation and to preserve the rule of law and sanctity of markets. lastly, we have government- funded research that pushes up the boundaries so venture capitalists can pick the flowers and start new companies. you look at our history and those five things, education, and the structure, the right rules for capital formation and government-funded resources have

propelled us going back to hamilton. and about that -- think about lincoln in that civil war, he creates the land grant universities in all of your states and build the national railroad connecting the atlantic with the pacific and passes the homestead act. he starts the national academy of sciences. teddy roosevelt, eisenhower -- these were all great builders of our formula for success. governors, i am sorry to tell you, but look at all five indices of our formula for success today, education, immigration, infrastructure, rules for capital formation, how did you like that subprime crisis? government-funded research -- all five pillars of our formula for success are today eroding

and in peril. this is the greatest public- private partnership. this is the real source of our strength. that's what our debate should be about. what do we cut because we've had to cut and we've made promises we cannot keep? where can we raise revenue because we need to reinvest, renewed and refreshed this formula for success for the 21st century. that, to me is what the discussion should be about. let me and my saying this. i began by saying michael and i were optimist, but frustrated. you've heard me now for 30 or 40 minutes and you are entitled to ask -- we get the frustration, but where from up the optimism? i will tell you.

the short answer is we stand on our heads a lot. if you look at this country upside down, it's easy to be an optimist if you just stand on your head. the country looks so much better and it's so much more exciting when viewed from the bottom up rather than the top down. when you look at the country that way, you see the greatest generation has not died. theica's great strength, thing that makes me an optimist, and it is the penultimate chapter of this book, is that, thank god this country is still all of people who just did not get the word, thank god they did not get the word we're supposed to be depressed, and the recession or unloved by the rest of the world.

college dropouts are supposed to flip hamburgers and people of color are supposed to go to the back of the bus. instead, they just do it, we are still the most open society in the world where individuals with a spark of idea or the passion to succeed can get up and walked out the door, chase a rambo, lead a crusade or started business. show me an obstacle and will show you an opportunity is still the motto. of all of these americans who just did not get the word. rosa parks just got on the bus and took her seat. so college dropouts just got up and created four of the biggest companies in the world. when all seemed lost in iraq, the u.s. military chose to surge because not -- when the officers told me one of my all- time favorite quotes -- we were

just too dumb to quit. thank god. this country is still full of people who did not get the word and are too dumb to quit. but we'll them something. if i were to draw a picture of america today, it would be a picture of the last space shuttle taking off. all of that thrust coming from below. that's all of those people down there who did not get the word. our country is still full of that injury -- skillful that energy. the washington d.c. is cracked and the pilots are fighting over the flight plan. as a result, we cannot achieve escape velocity. the escape velocity we need to bring the american dream to the next generation. that booster rocket is our 5 part formula for success.

we need to cut and we need to raise revenue because we need to reinvest in that the booster rocket for all those people too dumb to quit. that's all part of our past. to repeat the title of my book -- that used to be yes. because that used to be yes, it can be again. that is why today, the history books we need to read are our own. the country we need to rediscover today is america. thank you very much. [applause] thank you. thank you. [applause]

>> thank you very much. that was inspiring and -- we've got time for a dialogue now. i turned to my fellow governors. you and i had a brief conversation before we began. you just flew in from greece. we talked yesterday about the applications of what is happening to the u.s. economy and -- would you mind sharing your insight about your view on what is happening and that the impact on america? >> i was in greece for a few days last week. greece is a cautionary tale of many things. the thing to realize about greece is in many ways, it's just a petro state. its oil was in brussels. its oil came from the european

union. since 1981, since greece has been in the european union, it has been getting subsidies for infrastructure and education to bring it up to the level of the southern journey -- southern germany. they squandered and misspent those resources. is really just an oil state. we have to be careful that we are not an oil state. we can print dollars and we are the reserve currency. greece realized that what has happened in the last six years as we have gone from connected to interconnected to interdependent. it has happened really fast. greece woke up and said there were not just connected to germany but they have to be germans. you have to pay taxes, work and

german hours, take a german vacations. forget this mediterranean gig. you are germans. right now, you are seeing a great rebellion because it is a lot easier to borrow money for 30 days than become german. i did not know how the story will land, but it is really about values. that is what happens. we become interconnected, interdependent. all around this table, we are indirectly affected by whether or not the greeks will become germans. if the greeks defaults and it brings down german and french banks, remember those things called collateralized debt obligations, better known as derivatives that all of the people were betting on about your house, your house, and your house?

those same people have been betting on those banks. we have no idea if those banks ago under what billions trillions of dollars of derivatives will be triggered and what banks or hedge funds in america are vulnerable. we are all sitting here a long way away from greece, but whether they become germans really will touch us. it is a values issue. we've gone from the values of the greatest generation which i would call sustainable values, values that sustain, something that i learned from my friend. we have gone from sustainable values to situational values. do what the situation allows. you only make $50,000, tried to buy an 800 thicket thousand dollars home -- an $850,000

home? if the situation allows me, then i will do it. we have had a shift in this country. we need to get back to sustainable values, not sustainable values. that is our challenge. it is the same challenge for the greek people, but much more immediate. >> you talk a lot about education, better education, raise the average. we all do this with of these k- 12 systems with a the same hours, same books we have had for 100 years. how do we make them more efficient? >> i know you wrestle with this a lot. i am married to a first grade teacher. my daughter did it teach for

america, so we talk about this a lot. i will just read the first paragraph because this is right on your point, governor. the chapter's called "home work x 2 = the american dream." "hillary clinton never asked us for career device. had she done so, we would have told her this. when president barack obama offered her the job of secretary of state, you should have said no thank you, sir. it would have been wonderful to have been secretary of state when they spend all his or her time talking to a negotiating with other governments. now the success depends on how much leverage the secretary it brings it to the table.

it depends on american economic vigor. today, more than ever, national security depends on the quality of education. that is why i do not want to be secretary of state come instead want to be at the heart of national security policy, i want to be secretary of education." what all these problems have in common, which is an underlying theme of the book, is that we talk about our education. they only have a collective solution. unless we act collectively, we cannot address the problems our country faces. that is why we are stymied. there will be no democratic or republican solution. there will only be a high rent collection solution.

i have been around educators to much to not be humbled by how difficult buses, so i cannot tell you if we need bigger classrooms, smaller clusters, more teacher's assistants, or what. here's what we argue in the chapter. we all need to be part of the solution and make two points. the first is this. you give me a community with a the right neighbors who are ready to invest in public schools even if their kids are not in them because they know of they do not, they could be investing in bigger business. you give me parents who asked their kids every day to take an interest in their education and set higher standards for them. do you give me politicians who are out in the world learning what are the highest, best practices and coming home not trying to lower their state standards but raised them, not trying to lower the basket but raised them.

give me students to come to school ready to learn, not to send 40,000 text messages, and i will give you better teachers. i will make the worst teachers better and everyone of my better teachers better. i saw one of the worst movies i saw this year, "race to know where, -- "race to nowhere." it is about how our kids are so stressed out going to facebook, theater practice. you do not know what stressed is. stress is not understanding the thick chinese accent of your child's first boss. that is stressed. not enough facebook time does not qualify as a "stress"in my world. we profiled a teacher reform program which we think has been one of the cutting edge systems.

there is way too much dated today that makes it clear that the greatest leverage change that because firm can have is a high the effective teacher. a highly effective teacher can take a student three years behind and catch them up in a bad teacher can take a teacher on grade level and put them three years behind. the question is how do we partner, and this has to be a partnership, with teachers and the teacher unions have to do their part, governors have to do their part, to put in place evaluation system so that we are able to weed out the ineffective teachers or retrain those that can be retrained. should we award are teachers on the basis of their real standard that teachers deal is fair. i know a lot of your states have

been examining this. i have been impressed with what colorado has been able to do. they were able to get the american federation of teachers to go along with it. when you find a way to get teachers to buy in to an evaluation system and they did in washington, d.c., and the ratings of teachers found they fired 206 teachers that for two years in a row were not rated effective. that is something they are doing in partnership with the union. it is a combination of working with teachers to find ways to evaluate. when you are married to a teacher, you know one thing. the biggest education philanthropist in america are teachers. there's nobody who has given more money out of their pocket,

more hours of their time for pre than a teacher. if you are married to one, you know that. i am very uncomfortable when they say it is the teachers. we are trying to do to our teachers what we did in the soldiers out of iraq. 1% are going to carry the burden and the rest of us, we will just go along well with our lives. yes, teachers are critical and they are the key leverage agent, but we all have to be in on this game. parents, neighbors, business, politicians, and kids themselves need to be aware of the world they're going into. >> a governor barbour? >> pleasure to have you back. as a republican governor, i may be surprised to say i agree with

a "the new york times" columnist." >> can we get a close-up and freeze frame on that? >> when using values are the biggest thing, sustainable values. the first two subjects you spoke about in the q&a have brought this to my mind. one is we spend more on education and the state, federal, and local than any other country in the world and a huge percentage of our kids drop out. that goes back to values. the other thing that concerns me, and i think it is relating to what you're talking about is when i became governor of mississippi, i was concerned that our state has such a low labour participation rate, the percentage of adults who either have a job or are trying to get one. i am proud that we have increased it some, but nationally we are falling.

are these two things evidence of that we need to do with values before we can be successful? >> it is evidence to me. we devoted an entire chapter on this in the book. it is on value devaluation. it is central to our crisis. the passing of the greatest generation to the baby boomers, are parents, and i think of my parents in particular, they were born in the depression. my mom was in the navy and served in world war ii and then the cold war. whether it's democrats or republicans, they were tempered by those things. that was a generation that met a black swan several times. it tempered them and it did leave them, i think, for them to

gravitate toward more sustainable values. to do things that sustained. i do believe with the passing of that generation that we have lost something and we need to get back to it. i do not have a magic wand. to me, it is something that has to come from teachers, from parents, from political leaders come and from spiritual leaders. it is not anything you or i can legislate. we can only do so by example. i talked the talk about globalization and technology, but i do not walk the walk. i got in a lot of trouble recently because i said that i have never been on facebook. i have never done twitter, and i have never smoked a cigarette. i hope i can die being able to say all three. "the new york times" maintains its facebook and a twitter, but it is nothing that i do.

the reason goes back to -- your member when modems first came out? there is a sense that technology will save everything, you know what i mean? the internet will make you smarter, but it will not make you smart. the internet will extend your reach, but it will never tell you what to save your neighbor across the fence. all the good stuff in life, the important stuff from you cannot download. you need to do it the old- fashioned way, a church, synagogue, temple, mosques, schools, teachers, community. when modem's first came out, i started thinking about this. i wrote that i wish -- and this could apply to twitter, but every modem came with a warning from the surgeon general, "judgment not included." we have ceded so much to technology, you know what i mean? i do not pretend to have a magic

cure. we all have to be leaders in this. you in your state, me in my family, the president on a national level, but the first thing is to be aware. something happened here. in contrast in are booked about values two hearings that were held in congress and the first were the five baseball slugger is sitting as they were sitting "bicep to bicep" being grilled about steroids in baseball and it was two years later the five biggest american bankers sitting "briefcase to briefcase" being grilled about subprime mortgages and derivatives. in both cases, what happened? we were hitting home runs using steroids. these guys on wall street were using steroids. the guys in baseball were using

steroids. to me, it is symptomatic of that. i do not have the answer. what we hope to do is at least kick off the debate to say it needs to be a part of it. thank you for your question. >> i think this may be our last question. gov. abercrombie? >> mr. friedman, i find myself stating with regret it when you mentioned the phrase that was said to you by a military officer in iraq, "thank goodness we work too dumb to quit." i was hoping that the emphasis may have been measured have been smart enough not to get started. what i mean by that is that there may be a sixth element and maybe your book focuses on it,

but the question of cutting and spending and everything else. the sixth one is that we are not imperial rome. what i mean by that is that as soon as this meeting is over, the governors are going to meet to deal with the question of dual status command for the northern command across the country with regards to the relationship of the national guard to the u.s. military in the pentagon. one of the reasons we have 1% dealing with iraq and afghanistan as we no longer have the draft. we have a draft by default, the national guard. it is a benchmark, if you will, from my observation and i would like you to comment on it. if we do not come to grips with the question of whether or not we will act as an imperial rome-

typewriting help to whatever takes place and that we are the point of that spirit, i do not think we can come to grips with some of the rest of those elements that were central to your thesis or your multiple pcs today -- theses today. this is not a democrat or republican issue. the deployment of the national guard goes back to president clinton, kosovo, iraq, afghanistan. my basic observation to you is i do not think we have ever had a discussion in the nation, and i say that as a former member of the armed services committee, who made this complaint over and over again. what is the object of what we're doing with these massive deployments all around the world almost at a moment's notice? as that the role we're going to

assume? what are the implications of this? and as we come to grips and have a discussion, we have never had a conversation in a presidential election about it, this deployment by default. employers are saying, and we have to get used to hiring people in the national guard will go away for 12-18 months at a time? what does that mean? my bottom line observation is should there be a fixed element of that we are not imperial rome, and if we are what does that mean? >> that is a great question, governor. we address it a little in the book. for me, i wrestled with this a lot. i did not think there were any weapons of mass destruction in there. i support the recent era of the spring that is happening. i would be the first to admit

that whatever happens in iraq, we ever paid for it. okay? -- wheat overpaid for it. well over $1 trillion. i only hope we overpaid for something that will prove to be transformational so that the men and women who paid the real prize will be able to look back and take pride in what they participated in. i would tell you what to think about these issues today, if it is any help. i have thought about this and agonized over it a lot. i started my career in beirut, then jerusalem, then came to america. i have had a lot of experience in that part of the world. what i realized in recent years in the uprising is when the the middle east put a smile on my face? that is what i asked myself one day.

it is when sadat went to jerusalem. when he rockies' decided they're going to take on al qaeda, that put a smile on my face. the arab uprising in geneva put a smile on my face. i was there in tahrir square and that put a smile on my face. all of these things put a smile on my face in the middle east started with them. we had nothing to do with it. we did not even know some thought was going to jerusalem. we didn't know that they were meeting in oslo. that is the point and where i have come to hear. we can be a great multiplier, but only if they want to own it. that is my feeling. when people wanted to own something, whether it is your

kids, your citizens, our people abroad were trying to help it. you cannot ask them to do it. they will do much more than you have ever asked them. as i have said ad nauseam, i am a believer in the history of the world, the history of all mankind. no one has ever washed their rented car. in the history of all mankind, no one has ever watched a rented car. no one has ever watched a rented country, school, rented neighborhood. were i come from, which is why i would like to reduce our presence in afghanistan, but i do not see anyone who wants to own what i own. we can stay there if three things happen, pakistan becomes a different country, karzai becomes a different man, and obama succeeds in doing nation- building in afghanistan.

when i look at that, i say, "where is the ownership?" there is no town in afghanistan that our marines cannot take. is there any town in afghanistan that afghans can hold? i look for the ownership in what we hope for a decent outlook in afghanistan. >> but we do not want to get bogged down in an individual circumstances. the question still remains. i am trying to draw a parallel but not an analogy. the point still remains. we have to decide whether or not we will have a worldwide military presence in the sense of actual interference or trying to own situations, political situations, by military means. that this really affects every single thing have spoken about

today. >> i agree there will be trade- offs and we will have to face up to that. there's no question. we are the tent pole that holds up the world. i am not sure how comfortable i would be in hawaii if china control the pacific. there is one thing that your question raises and i can tell you for sure that we are headed for a time of trade-offs, ok? we cannot simply jump in everywhere that we want. if i have to have a trade-off, then the ones i am looking for where i would consider participating are ones where people are taking ownership and i can be that force multiplier. thank you very much. thank you. i really appreciate it.

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] -- 2011] >> today on "washington journal", jane hamsher will be the guest. -- "washington journal" live at 7:00 eastern on c-span. >> the c-span network provides coverage on politics, public affairs, nonfiction books, and american history. it is available online, and on social media networking site. social media networking site. we take c-span on the road